Monthly Archives: June 2011

Passive Guy recently received an analysis of a publishing agreement prepared by an experienced and respected literary agent who shall remain nameless in this post.

This analysis touched on some legal topics about which PG has made himself conversant over the past few months. In some cases, PG was in complete agreement with the analysis. In other cases, the analysis seemed way off base.

In all cases, the analysis supported what PG expects would be the publisher’s view of the contract in question. The recurring subtext was, “You don’t want to fight the publisher over this provision.”

As PG considered what was going on, he thought about the concept of Regulatory Capture.

Here’s a definition from The Economist:

Gamekeeper turns poacher or, at least, helps poacher. The theory of regulatory capture was set out by Richard Posner, an economist and lawyer at the University of Chicago, who argued that ‘Regulation is not about the public interest at all, but is a process, by which interest groups seek to promote their private interest … Over time, regulatory agencies come to be dominated by the industries regulated.’

As applied to literary agents, it is the “gamekeeper turns poacher or, at least, helps poacher” and “dominated by the industries” portion of the definition that clicks for PG.

Literary agents are creatures of the publishing world. Many have worked for publishers in the past and may do so again in the future. In their daily work, agents are constantly dealing with publishers, whether on major issues like publishing contracts or minor issues like the status of the book tour. A great many agents live and work in and around New York where a great many of their publishing counterparts also live and work.

Indeed, one of the agent’s chief attractions to an author seeking a publisher is the agent “knows how things are done” in the publishing business and “understands how to deal with publishers.”

Few agents have the luxury of representing a single author whose royalties are so large and consistent as to provide the agent all the revenue necessary to practice his/her trade. More typically, an agent represents a group of authors and the group changes from time to time with some authors dropping out and others coming into the author stable.

In order to keep the lights on and cover Manhattan rents and restaurant bills, the agent requires a stream of publishing contracts, each with its advance. This necessitates an ongoing series of contract negotiations with publishers. It is quite likely the agent will be dealing with the same people over and over on the publisher’s side.

Is it a profitable business strategy for the agent to bang heads hard on most or all contract negotiations, squeezing every penny possible out of the publisher? How many times can an agent get up and walk away from the table, refusing the publisher’s best offer? If the agent burns her bridges with an acquisition editor in one negotiation, what effect might that have if that editor is the perfect fit for another of the agent’s clients next month? If bridges are burned with one editor, how will the other editors working for the same publisher or in the same genre across publishers respond to a pitch? What happens if an agent builds a reputation as “hard to deal with” as she fights on behalf of her clients?

Does a publisher absolutely need a deal with a particular new author? Probably not. Does an agent absolutely need to get a deal for a particular new author? Probably not. Does a publisher absolutely need to deal with a particular agent for anyone but a megaseller author? Probably not.

Does an agent absolutely need the ability to deal with at least one publisher in a manner the publisher approves of? Definitely yes. Without a good relationship with a publisher and preferably several publishers, the agent isn’t an agent any more.

Ultimately, for an agent, publishers are more necessary than any author.

When a publisher says an obnoxious clause like the Non-Compete Clause we discussed a few days ago must be in a contract and explains why the publisher needs the clause, how does the agent explain this clause to her client? Probably using much the same rationale as the publisher does. “I know you don’t like it, but the publisher needs this because . . . .”

After explaining the obnoxious clause 100 times to 25 authors, will the agent have a tendency to accept the clause as “the way things are done these days” or “the new standard?” Will describing the clause as something “every publisher is requiring in new contracts” be a better way to get a publishing deal and advance for the author and the agent than trashing the clause?

Since agents and attorneys who work for agents are not regulators, we don’t have Regulatory Capture here. How does Agent Capture sound? Joe Konrath talks about authors succumbing to The Stockholm Syndrome in their dealings with publishers. There may be something like that going on with agents as well.

This became PG’s explanation for what he saw in the analysis of the publishing agreement described at the outset of this post. The analyst was so immersed in the way things are done and the needs of publishers that, almost automatically, the analyst adopted the viewpoint of the publisher on issues of contract interpretation.

To be clear, PG is not ascribing malevolent motivations to agents. His pop-psych theory is that Agent Capture goes with the territory. If you were an agent, you’d get captured yourself. So would PG. He can hear himself as captured PG: “Just shut up about paragraph 17 and sign the blooming contract.”

Passive Guy has negotiated a lot of contracts and also done a lot of litigating, some of it relating to contract disputes, breach and enforcement. Without going into a lot of background, a litigator doesn’t have to agree with anybody on the other side. Litigators don’t usually get captured by anything other than a towering ego.

Before nearly any trial, settlement negotiations occur and most litigation is resolved by settlement before a trial. However, even when the other side was Goliath and his client was David, when the deal wasn’t right, PG has often relished saying, “let’s just let the jury decide.” When a flicker of panic appeared in the eye of opposing counsel, it was a beautiful thing to behold. Sends a chill up PG’s spine just remembering it.

PG is not going to recommend hiring litigators to negotiate your publishing contracts. However, PG does believe the world of publishing contracts would be a better place if there were a bit more litigation regarding the terms and enforceability of contracts.

The Passive Guy Thought for the Day grew out of the decision by the US Supreme Court earlier this week in a class-action suit against Wal-Mart.

It might be worthwhile for authors who had the same or similar objectionable contract clauses in their contracts with a single publisher to discuss the possibility of a class-action suit against that publisher. The authors are similarly-situated in that each one has been damaged by an unfair or unfairly-enforced contract clause.

The nature of a class-action suit is that, while some actual author-plaintiffs would be necessary, the suit would ultimately be pursued on behalf of all authors who have suffered monetary damages or are threatened with monetary damages as a result of the contract and/or the publisher’s interpretation of the contract. Class-action suits allow those who do not wish to benefit to opt-out. Those who do not opt-out get a free ride in the litigation.

Generally speaking, in a class-action suit, the more plaintiffs the merrier, and, even more important, the more damages, the merrier. If a publisher has screwed 1,000 authors, it’s better than if the publisher only screwed 100 authors.

Just a thought in passing.

Obligatory Disclaimer: PG doesn’t practice law or give legal advice any more. Some days he wakes up feeling like it would be wonderful to go to court, but on those mornings, he just lies down until the feeling passes. PG never handled class-action litigation. It’s a specialized area and most attorneys don’t know much about it. You’ll want to find someone who has significant experience with class-action suits if this idea tickles your fancy.

Here’s an interesting theory on one of the side-effects of J.K. Rowling and her Pottermore ebook self-publishing venture.

Excerpts:

Digital distributor OverDrive will provide the e-book platform for Pottermore, according toPaidContent. Bloomsbury, Rowling’s publishers in the U.K. will receive some slice of the revenues as will, presumably, Scholastic, her U.S. publisher. Rowling made it clear that she wants her books to be made available on every device to “guarantee people everywhere are getting the same experience and at the same time.” But that would mean bringing the book to the Kindle, which would allow Amazon a cut of the revenues as well. Though, as Laura Owen has pointed out, “if there’s any author that Amazon would let dictate the terms, it’s Rowling.” But at what cost?

When Harry Potter debuted more than a decade ago, it shook up the publishing world. Since then, hundreds of millions of copies have been sold all over the world. Rowling has positioned herself to disrupt the digital publishing system, too, using the exact same materials. Her new site won’t start selling audiobooks and e-books until sometime in October, so the details are still a little shaky. Presumably, Rowling and her team are looking into all of their options.

“We want to make sure anyone who buys it can read it on any device,” Pottermore CEO Rod Henwood told the Bookseller. “We are talking to the Kindles, the Apples, the Googles, Barnes & Noble to make sure they are compatible. We set the pricing, we maintain the policy of making them available to as many readers as possible.” Henwood’s words suggest that the Potter books will be released in a single format, probably EPUB. The problem? Amazon’s Kindle, which controls about 60 percent of the e-reader market, according to PaidContent, doesn’t support EPUB. But, if that’s the route Rowling decides to take, it had better start. If Amazon doesn’t change its policies, it will risk losing Potter fans to the Nook, the iPad, the Kobo and other e-readers currently on the market.

From The Boston Globe regarding J.K. Rowling’s new website, complete with ebooks:

“Bricks and mortar stores are taking a lot of bullets and there’s a limit to how many bullets we can take,” says Roxanne Coady, owner of R.J. Julia Booksellers in Madison, Conn, one of more than 200 independent sellers of e-books through Google. “If the sellers of the Rowling e-books are saying they don’t need bricks and mortar stores, then that’s the result you’ll get.”

Jon Howells, spokesman for Britain’s Waterstone’s chain, said the Harry Potter book launches, which for years drew thousands of fans in wizard garb to midnight store openings, “have become the stuff of legend at Waterstone’s and other booksellers.”

“We’re therefore disappointed that, having been a key factor in the growth of the Harry Potter phenomenon since the first book was published, the book trade is effectively banned from selling the long-awaited e-book editions,” he said.

Tom Turcan, chief operating officer of Pottermore, said Rowling wanted “to make the books available to everybody, not to make them available only to people who own a particular set of devices, or tethered to a particular set of platforms.”

. . . .

E-books have jumped from less than 1 percent of total sales four years ago to more than 20 percent. Children’s books are catching up as the Kindle, Nook and other devices become cheaper and touchscreen readers such as the Nook and the iPad enable illustrated stories to be available in digital form. Potter books remain steady sellers four years after the series ended, especially as the final movie approaches, and publishers believe the e-books will be as revolutionary for the digital market as the paper ones were for the traditional market.

“The Potter books took children’s books in general to another level and we’ve never gone back,” said Susan Katz, president and publisher of HarperCollins Children’s Books. “And I think the news today could be the tipping point for 8-to-12-year-old market.”

Rowling is unveiling lots of new Potter material on her Pottermore website. You’ll want to be among the first million users to sign up before July 1 or you’ll have to wait until October.

Excerpts from The Guardian:

Although the author made clear that she had “no plans to write another novel”, the fresh Potter material – to be unveiled later this year – already stretches to 18,000 words about the novels’ characters, places and objects, with more to come. From Professor McGonagall’s love for a Muggle as a young woman, to how the Dursleys met (Petunia was working in an office); from new information about Slytherin, Ravenclaw and Hufflepuff houses, to details about wand wood, Rowling’s writing will be just one part of the richly interactive, free Pottermore.com website, which is intended to bring the Harry Potter storylines to interactive life for readers.

“I had more than half of the new material already written or in note form. I literally dug some out of boxes,” said the author at a press conference this morning to announce the launch of the website, which she and the Pottermore management team have been working on for two years with UK digital agency TH_NK. “I generated more material than ever appeared in the books. I thought ‘who would ever want to know the significance of all the difference wand woods?’ … Now you can go and see. It’s such a rich experience to do it this way.”

The material will be used on the new, free Pottermore website, a collaborative project for fans set in the Harry Potter universe. “I wanted to give something back to the fans that have followed Harry so devotedly over the years, and to bring the stories to a new generation,” Rowling revealed. “I hope fans and those new to Harry will have as much fun helping to shape Pottermore as I have. Just as I have contributed to the website, everyone else will be able to join in by submitting their own comments, drawings and other content in a safe and friendly environment. Pottermore has been designed as a place to share the stories with your friends as you journey through the site.” The website will open first to a million users who register first on 31 July – Harry’s birthday. These users will help shape the site, with its full launch to all users to take place in October.

. . . .

Although Rowling’s publisher Bloomsbury will receive a share of revenues from the ebooks, the digital editions, which will be compatible with all devices, will only be sold from the Pottermore website, thus disintermediating other booksellers such as Amazon. “It means we can guarantee people everywhere are getting the same experience,” said Rowling, of her decision to go it alone. “[I am] lucky to have the resources to do it myself and am therefore able to do it right. It’s a fantastic and unique experience which I could afford in every sense. There was really no other way to do it.”

Starting with the first novel in the series, Harry Potter and the Philosopher’s Stone, Pottermore will allow its users to navigate their way through the story, with all-new illustrations and interactive “moments”. Users start out by choosing a magical username, and as they move through the chapters of the book they will be sorted into houses – Rowling herself has written a “vast pool” of questions to direct users to their correct home – choose wands, shop on Diagon Alley and experience life at Hogwarts, just like Harry. Points can be won for houses by casting spells and mixing potions, users will be able to comment and add their own drawings and content – and Rowling herself will be dropping in “as a normal punter” now and then.

Here’s more analysis on J.K. Rowling’s venture into self-publication. It’s interesting that an author who seemed slow to come to ebooks has finally done so in almost the most disrupting manner possible.

Passive Guy is reading that physical bookstores are going crazy over this move and the folks at the Amazon and Nook bookstores have to wonder where this might leave them because Rowling is selling direct. At a minimum, PG thinks this will move Amazon toward compatibility with the epub format.

The Wall Street Journal thinks more authors will buck against publishers demanding ebook rights, at least at current “standard” royalties.

Excerpts:

In a video address to readers, Ms. Rowling said she created her own Harry Potter universe for fans to visit online. While her publishers and major online book retailers will continue to sell her physical books, Ms. Rowling has reserved for herself the digital editions, the fastest-growing segment in the book world.

. . . .

The move could inspire other authors, large and small, to pronounce themselves independent agents in hopes of tapping more lucrative paydays. Ms. Rowling refused for years to release her books in electronic format, retaining the digital rights for herself.

While most other authors have already handed over their digital rights to their publishers—most recently, John Grisham—Ms. Rowling’s deal could prompt them to self-publish when their deals come up for renewal or demand higher royalty rates than the 25% of net sales that most publishers offer today on digital editions.

Some may even choose to forgo all traditional means of book publishing and set up their own bookstores, reaping 100% of everything they sell.

“Every writer watches with great interest whenever somebody does something new,” said best-selling author Jennifer Weiner, whose next book, “Then Came You,” goes on sale July 12. “We all pay attention. If this turns out to be a success for her, for an author who had unheard-of success by selling through traditional bookstores with books on paper, then some may decide that they, too, don’t need bricks-and-mortar stores, or online booksellers, either.”

. . . .

Though she says she won’t be writing any more Potter books, Ms. Rowling is emptying her extra material into various corners of the site. She has handed over 18,000 words of additional content so far but says she will write more for the site as well.

The British author said Thursday she is lucky to have the resources to go straight to readers—and is happy she can ensure they have an equally magical experience when interacting with the digital Harry Potter. “There was really no other way to do that, for the fans or for me, other than to just do it myself,” she said.

Ms. Rowling’s declaration of retail independence comes at a time of extreme turmoil in book publishing and retailing around the world. In the year ended April 30, U.S. e-book sales jumped 163% to $313 million, according to the Association of American Publishers, but the sale of adult hard-cover books declined 19% to $300 million. The figures reflect the reporting of 22 companies.

Five years ago, an author such as Ms. Rowling wouldn’t have had the tools to sell her own works globally by herself.

. . . .

Publishers are intent on holding the line on both rates and rights. Most dramatically, they have repeatedly said they won’t sign contracts and offer advances to authors without acquiring all digital rights. But as companies such as Amazon.com Inc. increase their own publishing efforts, the traditional publishing world is coming under greater pressure to keep their authors happy.

The risk Ms. Rowling runs—the possible retaliation by retailers toward her next titles—appears limited compared to the potential financial rewards and her ability to control her relationship with her fans the way she wants. The ability to shape all forms of the book-selling and marketing experience has been a lifelong dream for many authors over the ages.

. . . .

A spokeswoman for Amazon said, “We’re working closely with Pottermore to make sure Kindle customers will be able to buy and read J.K. Rowling’s Harry Potter books.” An Apple Inc. spokesman had no comment.

. . . .

The decision to release the Potter books digitally comes at a time when there is increased speculation about which formats—physical or digital—children will embrace in the years ahead. Scholastic, for example, is currently working on an e-reading software application for kids that is designed to bolster digital reading and that will likely be unveiled this fall.

After a week of heavy speculation, JK Rowling has revealed that she is to self-publish the e-books to her mind-bogglingly successful Harry Potter series through her newly-announced proprietary platform, Pottermore.

. . . .

Rowling stands to make significantly more money by selling her e-books directly than if she sold them through her publisher. Authors generally get anywhere between a few and 10 percent of royalties from printed book sales and anywhere between 20 and 40 percent on e-books. If they self publish through the likes of Amazon, they can get as much as 70 percent of revenues (with the remainder going to the e-book store). Selling direct to fans also means that Rowling will benefit from demographic data and contact details traditionally safeguarded by the publisher or retailer.

A blog meme is weaving through the writers’ underground. You write a post that begins, “Writing is like . . .” and call out three author friends to spread the meme, avoid breaking the chain and keep hope alive.

Here’s the beginning of a “Writing is like” post from author Jason McIntyre:

Writing is like…being cast away on an exotic island. You have beautiful things to eat but no cutlery. The fish, lobster and crab are the best you’ve ever seen and you just know they would be delicious…but there is no fire to cook them. The sunshine is intense and lasting but you have no sunglasses or UV protection. The ocean is warm but you have no towel after a swim.

If you’re like Passive Guy, your work flows from your fingers to your screen in a surging river of transcendent genius.

Then time passes (30 seconds, 30 days) and you look at what you’ve written. You spy a bit of flotsam here and there and fix it, but genius still abounds.

You send your magic words to someone, expecting an instant reply filled with awe and congratulations.

Instead, after a few days, you receive something with more redlines than your eyes on New Year’s Day. This is impossible, but every redline is absolutely correct and condemns you to a rewrite of immense proportions.

The Writers Anonymous Blog gives you some ideas about how to examine your own work with redline eyes.

Excerpts:

1. Change your work’s appearance

By changing the size, color, or font of your work, you force yourself out of the familiar feel of your favorite font. Suddenly, words that fit poorly with the flow of the rest of your article, story, or other work pop out due to the changed appearance. The best font to use is one that changes which words are on the edge of a page–so, as an example, you might use a fixed-width font like Courier instead of your typical variable-width font like Times New Roman.

This method is best used for looking at the general flow of your article and making sure that it makes sense. You may also find that this method helps find double word errors, such as “the the” or “of of”.

. . . .

5. Make a list of your most common errors

Every writer I know tends to make the same types of mistakes over and over. The trick, for you, is to know your own most common errors and look specifically for those problems.

Looking for the issues most common to many writers is a good place to start. Read through this partial list of common errors…do you make any of these common errors?

Run-on sentences

Paragraphs that mix several different subjects with no transitions

Mixing up “their,” “there,” and “they’re” — “Their” is used to imply ownership, “there” indicates a position, and “they’re” is a contraction meaning “They are.”

Using repeated words like “the the”, “of of”, etc.

More common errors are listed and they skewer PG’s writing to the wall. He is a master of common errors.

Perhaps if he tried writing in a different language, he could do better.

As part of its latest quarterly earnings report commentary, Barnes & Noble said its ebook market share continues to grow and is currently 26-27% of total ebooks sold.

Passive Guy admits he’s a Kindle fan and buys no ebooks from the Nook store. None of the indy authors who report ebook sales show anywhere close to this percentage of sales through Nook.

PG has heard that the Nook store is a hotspot for romance readers, but he’s skeptical about Barnes & Noble’s market share claims. For one thing, he’s not aware that Amazon shares details on Kindle sales with any third parties.

If he’s correct that Amazon doesn’t share Kindle sales data, PG speculates that determining the total ebook market is going to be a guesstimation exercise that begins with data on ebook sales from publishers. Of course, this misses indie sales and indie authors regularly inhabit some spots on Amazon’s top 25 bestseller list. One other factor may make publisher ebook sales data suspect – persistent reports that publishers are significantly underpaying royalties to authors for ebook sales.

Whenever someone is determined to provide an estimate of the total size of a market, an estimate will appear, but the accuracy of that estimate is another story.

So, what do we think? Does Barnes & Noble and its Nook reader have 26-27% of the total ebook market or not?

According to a report called Consumer Attitudes Toward E-Book Reading from the Book Industry Study Group (BISG), just as in everything else bookish, women are where the ebook market is.

Excerpts:

The BISG says most eBook power buyers — that is, someone buying an eBook at least once a week — are by and large women (some 66 percent), who mostly buy fiction. Out of the entire eBook market, power buyers make just 18 percent of all buyers, but they buy 61 percent of the eBooks.

In terms of exactly what is selling: literary fiction, science fiction and romance lead the way, each with over 20 percent of the market. Overall, eBooks comprise 11 percent of the total book market, with 13 percent of print book buyers also downloading eBooks.